Federal Circuit Court Issues Decision Changing Standard for Duty of Disclosure and Requirements for a Finding of Inequitable Conduct; USPTO Proposes Rule Change to Implement Decision

Articulating a new “but for” materiality standard in Therasense, Inc. v. Becton, Dickinson & Co., the Federal Circuit has said that its decision should reduce the overuse of the defense of inequitable conduct in litigation (which the court termed the “atomic bomb” of patent law), and reduce the strain on PTO resources from submission of huge volumes of material in order to comply with the former standard. The standard previously employed by the court was a combination of the PTO’s rule requiring evidence inconsistent with a position an applicant takes in prosecution and that of other, prior court decisions requiring submission of material a “reasonable examiner” would find “important.” The new standard as defined by the court finds information to be material (and thus required to be submitted) “if the PTO would not have allowed a claim had it been aware of the undisclosed prior art.” For a finding of inequitable conduct, the court stated that a district court “must determine” whether the claim at issue would have been granted if the PTO was aware of the reference, using the preponderance of the evidence burden and giving the claims their “broadest reasonable construction,” as would have occurred during ex parte prosecution. The Court further sets forth an exception to these principles in cases of “affirmative egregious conduct”, i.e., intentional withholding of a reference in order to obtain a patent.

Moreover, with respect to a finding of inequitable conduct, the Court held that an accused infringer “must prove that the patentee acted with the specific intent to deceive the PTO,” Specifically, a finding of negligence, gross negligence, or the application of a “should have known” standard “does not satisfy this intent requirement,” according to the court. Rather, there must be clear and convincing evidence that an applicant “made a deliberate decision to withhold a known material reference,” (emphasis in the opinion). According to the Court, “the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.”

Subsequent to the Therasense decision, the PTO has proposed new rules for how it will apply the Court’s newly articulated standard of materiality. With a stated goal of reducing “the incentive to submit information disclosure statements containing marginally relevant information and enabling applicants to be more forthcoming and helpful to the Office”, the Office has proposed modifications to “Rule 56” (37 C.F.R. §1.56) to reflect the “but for” standard of materiality, while also recognizing that affirmative, egregious misconduct” will still result in a violation of the duty of disclosure. Specifically, the proposed rule defines information as material to patentability (and thus must be cited) if:

(1) The Office would not allow a claim if it were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction; or

(2) The applicant engages in affirmative egregious misconduct before the Office as to the information.

At the present time, it is not known whether the Federal Circuit’s decision in Therasense will be appealed, nor whether the U.S. Supreme Court will hear such an appeal. The PTO, in its proposed rule, indicates that if an appeal is taken up by the Supreme Court, the Office will consider delay of any final rule until the Supreme Court has issued a decision.

Since the proposed rule is not yet in effect, the current standard of materiality remains in effect under PTO rules, if not in the courts. As a result, we do not at the present time advise any changes in current practices respecting gathering of information for compliance with the duty of disclosure.


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